ABSTRACT
The financial system in Malaysia is relatively well developed. Under the Bank Negara which is the main controller of the country’s financial policy, there were 38 commercial banks operating a total of 911 branches by the end of 1980s. Commercial banks are the major of credit for small and medium-sized enterprises (SMEs) consisting of about 20 percent of total new bank credit each year. There were only 12 Merchant Banks in Malaysia in 1988 but the number is believed too have increased significantly in 1990s. They play a significant role in providing finance to SMEs especially in the manufacturing sector. For instance, in 1989, it is recorded that Merchant banks provided a total of 7.9 percent of the total loans to the manufacturing sector. There are several specialised Development Finance Institutions in Malaysia catering for loans on concessional terms to support and promote industrial and agricultural development.
